Thursday, July 18 2019 | ASIA TODAY INTERNATIONAL - Reporting the Business that Matters in Asia
Updated: 1 hour 39 min ago
OPEC+ cuts are tightening the market and driving up prices. The deal could be extended for the entire year. Sanctions to Venezuela and Iran could tighten supply further. However, OPEC has significant spare capacity to offset upward price pressures. In 2019, U.S oil production will expand further while substantial transportation capacity will be added.
After last week investors’ shift into risky assets, the risk-on mood tempered at the start of this eventful week.
The risk that the main developed economies are moving towards a regime of reduced economic growth in the medium term has once again gained relevance in recent months. It has been driven by the increase in the probability of recession in the United States and the eurozone, and the relapse of inflation expectations and long-term interest rates in both regions.
European banks hold sovereign debt on their balance sheet for multiple reasons. Firstly, sovereigns are eligible in order to comply with liquidity requirements. In addition, they can be used as collateral in the private repurchase markets ("repo") and to obtain funds from the central bank.
Risk-on mood returned to the markets this week amid positive surprises in the US and China PMIs, rising hopes for a near term US-China trade deal and the declining probability for no-deal Brexit, which together offset a cautious view from the IMF on the growth outlook.
Highlights: ESAs issue report on risk and vulnerabilities. EBA issues clarifications for API under PSD2 and risk dashboard. ESMA launches CCP stress test. OJEU publishes equivalence decisions. BdE issues supervision report. CNMV issues Brexit information. FRB issues final rule on intraday credit to FBOs. US Agencies propose rules to limit impact of large bank failures
Financial markets were little changed awaiting further details on US-China trade talks, which are currently underway. The US is mulling over giving China until 2025 to fulfill its trade promise, which includes a commitment to purchase more US agricultural products, among others. Ongoing talks are expected to pave the way for Trump and Xi to seal a trade deal.
There is a positive tone in the financial markets on the back of trade optimism and improvement in China’s growth outlook. Both equity and sovereign bond yields increased across the board, suggesting a decline in global risk premium.
U.S. led forces have captured the last pocket of ISIS in Syria. In Venezuela, Russian material involvement could trigger more regional risks. In Asia, U.S. pressure on North Korea continues. In Algeria, instability continued during the month and led the president Bouteflika to step down his mandate. Social unrest should ease off from now on.
Consumer prices increased by 1.03% in March in line with expectations (1%, Consensus & BBVA Research), resulting in a steady annual inflation at 19.7%. Assuming no additional shock, we still expect consumer inflation to stay between 19-20% till June, when favorable base effects will start to weigh and end the year at 14.5%.
This paper quantifies and analyses the interrelationship between the economic activity (GDP) of each Spanish region in response to the variation in economic activity of the remaining regions and to oil price shocks. The regional GVAR model developed offers great potential for many lines of analysis and the monitoring and projection of regional economic activity.
Sales of new apartments in Lima continued to recover in 2018 in a context of improved formal employment, attractive interest rates, and some government incentives. We estimate that sales improvement will keep consolidating this year. On the prime office market side, the supply of previous years is gradually being digested and this will still continue in 2019.
Financial markets remained broadly steady. Investors took a breather today after starting this week on a positive note, encouraged by positive PMI data surprises from the US and China, more accommodative central bank policy and cautious optimism towards a US-China trade deal.
Social security registrations increased by 155,100 people (2.9% compared to March 2018) and unemployment decreased by 34,000 people (-4.9% compared to one year ago). Taking favourable seasonality out of the equation, the number of people in employment grew by 50,000 and the unemployment rate fell by 10,000.
DiGiX is a composite index that measures the degree of digitization in 99 countries around the world. It classifies information into three broad categories, supply conditions, demand conditions, and institutional environment.
The long-term prosperity of a society is dependent on its productivity—in other words, its capacity to increase the quantity of goods and services produced per unit of labor input. GDP per person of working age can be calculated by simply multiplying the activity rate by the employment rate for the active population and by productivity.
Optimism in the markets at the beginning of the week after a positive surprise in the confidence indicators from China and the US. In addition, trade optimism remains as trade talks between the US and China will continue this week. Finally, U.S. employment data, alongside developments on the Brexit, will catch the market’s attention.
The economy of the Canary Islands grew by 2.5% in 2018; further growth of 2.4% is expected in 2019 followed by slower growth of 1.8% in 2020, giving seven consecutive years of economic recovery. 47,000 jobs will be created on the islands between the end of 2018 and 2020, but the unemployment rate will stand at 18.6% in 2020.
The GDP of Extremadura grew by 2.6% in 2018, exceeding 2017 growth by 0.5 percentage points, and is expected to increase by 2.4% in 2019 and by 1.9% in 2020. As a result, the creation of 13 thousand jobs is expected during 2019–2020, and the unemployment rate is expected to fall to 21.2% in 2020, still 5.8 percentage points above the 2007 minimum.
The inflation figures for February were good. Monthly inflation stood at 0.57% with annual inflation at 3.01%, the lowest since August 2014. Analysts and economists were expecting a higher monthly figure and this meant that the good news provided even greater optimism.